- Third quarter revenue totaled $3.4
million
- Cash balance of $816,000 as of March 31,
2014
- Annualized expenses reduced by over $4.0 million since
January 1, 2014
Urologix®, Inc. (OTCQB:ULGX), the leading provider of in-office
procedures for the safe, durable and effective treatment of BPH,
today reported financial results for its fiscal third quarter ended
March 31, 2014.
Operating Results for the Third Quarter of Fiscal Year
2014
Third quarter fiscal year 2014 revenue totaled $3.4 million,
down 12% sequentially and down 18% compared to the third quarter of
fiscal year 2013. The revenue declines sequentially and compared to
the third quarter of fiscal year 2013 were due to lower volume of
units sold in both product lines.
"In the third quarter, we took significant steps to transform
our business to meet the changing dynamics in the healthcare market
place and to rationalize our operating costs. Following the
completion of our restructuring announced on April 10th, we have an
organization that we believe can support our customers and deliver
our message of durable clinical results combined with low
healthcare costs, all with reduced expenses of over $4 million on
an annualized basis from where we were at the end of December
2013," stated Greg Fluet, Chief Executive Officer. "As we
previously stated, we expected there would be a learning curve as
our team adjusted to this new deployment model. In addition, the
third quarter has always been a challenging quarter for us given
the weather and the reset of patient deductibles. With our team's
continued focus on providing high quality service to our customers,
building the awareness of the cost-effectiveness of our
technologies and the changes to our operating plan, we believe we
will be able to generate positive cash flow from operations in
fiscal year 2015."
As of March 31, 2014, the Company's cash balance was $816,000 as
compared to $1.3 million as of December 31, 2013. Cash utilization
in the quarter was $451,000.The Company's cash utilization for the
third quarter benefited from approximately $374,000 in reduced
operating expense compared to the second quarter. The Company's
cash needs will be determined by a number of items including
operating performance, accessibility of the Silicon Valley Bank
line of credit and the timing of the payment of annual royalty
amounts due and unpaid in the third quarter of the fiscal year
totaling $650,000 which are included in short-term deferred
acquisition payments on the balance sheet.
Gross profit for the third quarter of fiscal year 2014 was
$849,000, or 25% of revenue. Gross profit was negatively affected
by a $739,000 non-cash charge associated with the write down of
Prostiva capital equipment inventory. The write down was triggered
by the low volume of sales of the capital equipment and does not
affect the marketability of the product. On a non-GAAP basis,
excluding the effects of this non-cash charge relating to Prostiva
inventory, third quarter gross margin was 47%. The decrease in
gross margin, excluding the effects of the non-cash charge,
compared to the prior year third quarter was driven by lower
production volumes and higher costs related to the Prostiva product
line.
Total operating expense was $2.3 million for the third quarter
of fiscal year 2014 compared to $2.9 million in the third quarter
of fiscal year 2013 and $2.7 million in the second quarter of
fiscal year 2014, a decline of 20% and 14%, respectively. Excluding
the $321,000 gain related to the demutualization of an insurer in
the third quarter of fiscal year 2013, operating expenses for the
third quarter of fiscal year 2014 as compared to the prior fiscal
year third quarter declined 28%, driven primarily by a $602,000
reduction in sales and marketing expense. The sequential
decline in operating expense was driven by lower sales and
marketing expense of $368,000, largely the result of the impact of
the restructuring announced on January 8, 2014.
For the third quarter of fiscal year 2014, Urologix reported a
net loss of $1.7 million, or $0.08 per diluted share, compared to a
net loss of $1.0 million, or $0.05 per diluted share, in the third
quarter of fiscal year 2013. The increase in net loss in the third
quarter of fiscal year 2014 was primarily due to the higher cost of
goods related to the $739,000 non-cash charge associated with the
write down of Prostiva capital equipment inventory.
Earnings Call Information
Urologix will host a conference call with the financial
community to discuss fiscal year 2014 third quarter results on
Tuesday, May 6, 2014 at 4:00 p.m. Central Daylight Time. To listen
to the call, please dial 1-866-515-2911 and enter the Participant
Passcode 73790575 at least 10 minutes prior to the call. A live
webcast of the call will be available through the investor
relations section of the Company's website at www.urologix.com and
available for replay approximately two hours after the completion
of the call.
| Non-GAAP Gross Margin Percentage
Reconciliation |
|
|
| |
Three Months |
Nine Months |
| |
Ended |
Ended |
| |
March 31, 2014 |
March 31, 2014 |
| Sales |
$3,356,000 |
$10,941,000 |
| Cost of goods sold |
2,507,000 |
6,431,000 |
| GAAP gross profit |
849,000 |
4,510,000 |
| |
|
|
| Inventory charge excluded from cost of goods
sold |
739,000 |
739,000 |
| |
|
|
| Non-GAAP gross profit |
$1,588,000 |
$5,249,000 |
| Non-GAAP gross margin percentage |
47.3% |
48.0% |
Notes to Reconciliation of Non-GAAP Measure to
GAAP
Management believes non-GAAP financial information provides
meaningful supplemental information regarding the Company's
financial performance by excluding the non-cash write down of
capital equipment inventory in the third quarter of fiscal year
2014. Management believes this inventory charge is a non-recurring
item that is not indicative of the operating results of the
business. Urologix believes that this additional financial
information is useful to management and investors in assessing the
Company's historical and future performance.
About Urologix
Urologix, Inc., based in Minneapolis, develops, manufactures,
markets and distributes minimally invasive medical products for the
treatment of obstruction and symptoms due to Benign Prostatic
Hyperplasia (BPH). Urologix' Cooled ThermoTherapy™ produces
targeted microwave energy combined with a unique cooling mechanism
to protect healthy tissue and enhance patient comfort. The
Prostiva® RF Therapy System delivers radio frequency energy
directly into the prostate destroying prostate tissue, reducing
constriction of the urethra, and thereby relieving BPH symptoms.
Both of these therapies provide safe, effective and lasting relief
of the symptoms and obstruction due to BPH. Prostiva® is a
registered trademark of Medtronic, Inc., used under license. All
other trademarks are the property of Urologix.
If you'd like more information on this topic, please contact
Brian Smrdel at (763) 475-7696 or bsmrdel@urologix.com or to learn
more about Urologix and its products and services, visit their
website at www.urologix.com.
The Urologix, Inc. logo is available at
www.urologix.com/clinicians/resource-library.php.
Forward Looking Statements
This press release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Any statements contained
in this press release that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology
are intended to identify forward-looking statements. Such forward
looking statements include, for example, the effectiveness of the
Company's sales and marketing strategies and organization, the
Company's future revenue and operating performance, the effect on
expenses or cash balances as a result of the previously announced
strategic restructurings, the development and marketing of new
products, the timing or payment of any amounts to Medtronic, and
the availability of borrowing under the line of credit with Silicon
Valley Bank. The statements made by the Company are based upon
management's current expectations and are subject to certain risks
and uncertainties that could cause the actual results to differ
materially from those described in the forward-looking statements.
These risks and uncertainties include market conditions and other
factors beyond the Company's control and the risk factors and other
cautionary statements described in the Company's Annual Report on
Form 10-K for the year ended June 30, 2013 and other documents
filed with the Securities and Exchange Commission.
| Urologix,
Inc. |
| Statements of
Operations |
| (Unaudited, in
thousands, except per share data) |
| |
|
|
|
|
| |
Three Months
Ended March 31, |
Nine Months
Ended March 31, |
| |
2014 |
2013 |
2014 |
2013 |
| |
|
|
|
|
| Sales |
$3,356 |
$4,082 |
$10,941 |
$12,405 |
| Cost of goods sold |
2,507 |
2,056 |
6,431 |
6,127 |
| Gross profit |
849 |
2,026 |
4,510 |
6,278 |
| |
|
|
|
|
| Costs and expenses: |
|
|
|
|
| Sales and marketing |
1,313 |
1,915 |
4,839 |
5,639 |
| General and administrative |
527 |
711 |
1,773 |
2,094 |
| Research and development |
408 |
538 |
1,281 |
1,756 |
| Change in value of
acquisition consideration |
(12) |
-- |
(105) |
(369) |
| Gain on demutualization |
-- |
(321) |
-- |
(321) |
| Medical device tax |
52 |
41 |
172 |
41 |
| Amortization expense |
28 |
26 |
72 |
78 |
| Total costs and expenses |
2,316 |
2,910 |
8,032 |
8,918 |
| |
|
|
|
|
| Operating loss |
(1,467) |
(844) |
(3,522) |
(2,640) |
| Interest expense |
(178) |
(98) |
(516) |
(348) |
| Foreign currency exchange gain/(loss) |
(1) |
(6) |
1 |
(9) |
| Loss before income taxes |
(1,646) |
(988) |
(4,037) |
(2,997) |
| |
|
|
|
|
| Income tax expense |
18 |
17 |
46 |
48 |
| Net loss |
$ (1,664) |
$ (1,005) |
$ (4,083) |
$ (3,045) |
| |
|
|
|
|
| Net loss per common share---basic |
$ (0.08) |
$ (0.05) |
$ (0.19) |
$ (0.15) |
| |
|
|
|
|
| Net loss per common share---diluted |
$ (0.08) |
$ (0.05) |
$ (0.19) |
$ (0.15) |
| |
|
|
|
|
| Weighted average number of common shares
outstanding---basic |
21,326 |
20,902 |
21,195 |
20,637 |
| |
|
|
|
|
| Weighted average number of common shares
outstanding---diluted |
21,326 |
20,902 |
21,195 |
20,637 |
| |
| Urologix,
Inc. |
| Balance
Sheets |
| (in
thousands) |
| |
|
|
| |
March 31, 2014 |
June 30, 2013 |
| ASSETS |
(unaudited) |
|
| Current assets: |
|
|
| Cash |
$816 |
$2,290 |
| Accounts receivable, net |
1,797 |
2,132 |
| Inventories |
1,321 |
1,571 |
| Prepaids and other current
assets |
214 |
128 |
| Total current assets |
4,148 |
6,121 |
| Property and equipment: |
|
|
| Property and equipment |
12,177 |
12,165 |
| Less accumulated
depreciation |
(11,647) |
(11,430) |
| Property and equipment,
net |
530 |
735 |
| Other intangible assets, net |
1,423 |
1,587 |
| Goodwill |
3,036 |
3,036 |
| Long-term inventories |
172 |
1,043 |
| Other assets |
5 |
5 |
| Total assets |
$9,314 |
$12,527 |
| |
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT) |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$1,015 |
$628 |
| Accrued compensation |
622 |
721 |
| Deferred income |
9 |
5 |
| Short-term deferred acquisition
payment |
1,304 |
681 |
| Current Portion of long-term
debt |
920 |
-- |
| Interest Payable |
78 |
-- |
| Other accrued expenses |
539 |
602 |
| Total current liabilities |
4,487 |
2,637 |
| |
|
|
| Deferred tax liability |
63 |
36 |
| Long-term deferred acquisition payment |
3,632 |
4,026 |
| Long-term debt |
4,413 |
5,333 |
| Other accrued liabilities |
46 |
75 |
| Interest payable |
167 |
-- |
| Total liabilities |
12,808 |
12,107 |
| |
|
|
| Shareholders'
equity/(deficit): |
|
|
| Common stock |
209 |
208 |
| Additional paid-in capital |
119,398 |
119,230 |
| Accumulated deficit |
(123,101) |
(119,018) |
| Total shareholders'
equity/(deficit) |
(3,494) |
420 |
| Total liabilities and
shareholders' equity/(deficit) |
$9,314 |
$12,527 |
| |
| Urologix,
Inc. |
| Condensed Statements of
Cash Flows |
| (Unaudited, in
thousands) |
| |
|
|
| |
Nine Months
Ended |
| |
March
31, |
| |
2014 |
2013 |
| Operating Activities: |
|
|
| Net loss |
$ (4,083) |
$ (3,045) |
| Adjustments to reconcile net loss to net cash
used for operating activities: |
|
|
| Depreciation and
amortization |
447 |
505 |
| Employee stock-based
compensation expense |
169 |
200 |
| Provision for bad debts |
(7) |
29 |
| Loss on disposal of assets |
3 |
7 |
| Prostiva inventory reserve |
739 |
-- |
| Accretion expense on deferred
acquisition payments |
334 |
439 |
| Net adjustment to acquisition
consideration |
(105) |
(369) |
| Deferred income taxes |
27 |
32 |
| Change in operating items, net
of acquisition: |
|
|
| Accounts receivable |
342 |
44 |
| Inventories |
336 |
(1,017) |
| Prepaids and other assets |
(86) |
93 |
| Accounts payable |
387 |
2,607 |
| Accrued expenses and deferred
income |
(187) |
(75) |
| Interest payable |
245 |
-- |
| Net cash used for operating
activities |
(1,439) |
(550) |
| |
|
|
| Investing Activities: |
|
|
| Purchases of property and
equipment |
(28) |
(55) |
| Purchases of intellectual
property |
(7) |
(24) |
| Net cash used for investing
activities |
(35) |
(79) |
| |
|
|
| Financing Activities: |
|
|
| Proceeds from stock option
exercises |
-- |
16 |
| Issuance of common stock |
-- |
3,814 |
| Net cash provided by financing
activities |
-- |
3,830 |
| |
|
|
| Net increase/(decrease) in
cash |
(1,474) |
3,201 |
| Cash: |
|
|
| Beginning of period |
2,290 |
1,899 |
| End of period |
$ 816 |
$ 5,100 |
| |
|
|
| Supplemental cash-flow
information |
|
|
| Income taxes paid during the
period |
$ 27 |
$ 15 |
| Net amount of inventory
transferred to property and equipment |
$ 46 |
$ 73 |
CONTACT: Urologix Media Contact
Susan Overby
(763) 745-1540
Soverby@urologix.com
Urologix Investor Relations Contact
Brian Smrdel
(763) 475-7696
Bsmrdel@urologix.com
Urologix (CE) (USOTC:ULGX)
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